FRIDAY, March 29, 2024
nationthailand

TBank to the rescue of car-loan clients

TBank to the rescue of car-loan clients

Thanachart Bank, the market leader in auto lending, has designed a restructuring plan for first-car borrowers who find that they cannot repay debts.

“The size of first-car loans is small. The monthly instalment is about Bt7,000-Bt8,000. We can control the quality of debts,” Anuchart Deeprasert, senior vice president of TBank, said yesterday.
The bank believes that its customers do not want their loans to fall into the non-performing (NPL) category, “so if they run into unexpected situations, we should have programmes ready to help them out”.
The restructuring programme will help alleviate the financial burden of customers by extending the loan term and easing repayment conditions while helping the bank to avoid having to repossess vehicles or seeing NPLs get out of hand, he said.
NPLs are expected but the volumes involved are not significant.
The government’s first-car-buyer scheme has created both real and artificial demand. Some participants do not have much debt-servicing ability but want the tax rebate offered under the programme, which expires at the end of this month.
The bank has a credit scoring system to ensure that borrowers will not create NPLs by checking their background and verifying their repayment ability.
For example, a white-collar worker earning a monthly salary of Bt15,000 might want to take out an auto loan but if he is a recent hire, the bank will not approve the loan unless his family has a firm financial status.
The bank will know the actual number of borrowers joining the first-car scheme by year-end, but he expects about 30 per cent of new auto loans are for that programme.
The bank has an auto life insurance policy called Smile Car to offer customers, but it is more popular with families than with single people. First-car buyers who are single do not pay attention to insurance because they do not have as big a financial burden as family buyers.
About 30-40 per cent of new auto-loan customers purchase a Smile Car policy. Most of them are in the South.

BACKLOG
The new-car market should return to normal in the second quarter of next year after the backlog in deliveries is cleared in the first quarter. New-car sales next year are expected to decline by 10-15 per cent from 1.4 million units this year.
The bank still projects securing 20 per cent of total car sales. Its loan portfolio is expected to grow by 10-12 per cent, which is not much because the portfolio is large and customers are always paying down their debt through instalments.
TBank has outstanding auto loans of Bt350 billion, Anuchart said.
Isara Wongrung, executive chairman of Kasikorn Leasing, said each leasing company had its own measures to manage debt quality. At KLeasing, a high down payment has been set to screen the quality of customers.
That might result in lower interest income but the company does not want to face problems in debt collection.
KLeasing’s NPL ratio is only 0.8 per cent, against 1.8 per cent in the industry.
Even though carmakers are not revealing actual sales figures yet from the first-car scheme, sales of small models with engines below 1,500cc are showing robust growth.
For October, Mitsubishi reported the highest spurt in sales of 2,548 per cent to 6,938 units, followed by Suzuki with growth of 1,152.8 per cent to 2,894 units and Nissan of 440.8 per cent to 11,259 units.
Toyota reported sales in October of 20,211 units, up from 7,007 units in the same month last year, and Honda recorded a similar surge in sales of 19,666 units from 4,902 units.
Salinee Wangtal, the Bank of Thailand’s assistant governor for supervision, said the central bank had not detected a rise in NPLs caused by instalment purchases of vehicles.
“According to internal information, only 2 per cent of non-performing loans are in the category of car hire-purchases, and the ratio has not increased from the past,” she said.
Salinee said this finding had been confirmed by commercial banks involved in the car-loan segment.
Meanwhile, the BOT is conducting a survey to find out if there are any irregularities in commercial banks’ practice in granting instalment loans.

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